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In our talk about annuities, we continued to reference something called the annuity surrender period. In this article we are going to take a deeper look at the surrender period so it’s absolutely clear what’s going on.

Now, an annuity may not even have a surrender period, or it very well may have one that lasts as long as ten years or even much more than that. You must know the terms of your agreement before signing!

What this annuity surrender period is though, is a length of time that must expire before you can have access to your money without paying a penalty. Another way to think about it is, if you attempt to withdraw your money during the surrender period, you will pay a hefty penalty for not having let it mature long enough.

Why is there an Annuity Surrender Period?

The reason this exists is basically to give the insurance company their own policy that guarantees them that they will be allowed to hold on to your money for a certain period of time, allowing them to generate interest and make their own earnings.

So it makes sense when you consider that a longer annuity surrender period offers you much larger benefits than a shorter one. They can extend those benefits to you because they get to reap the rewards of having your money longer. You will likely have a choice about the surrender period you want. Choose wisely in consideration of what your needs are or will be.

There are even some annuities that have a longer surrender period but offer you no benefits. They exist simply to abuse you and earn more money for the sales team. Do not fall for this trick. Do your research and know what is normal and regular.

Not Paying the Surrender Charge

There are some ways that companies will allow you to access your money without paying the surrender charge. Some companies will let you have ten percent of the premium, or will allow you to cash out the earnings. If you have special circumstances such as medical needs, they may forgive the surrender charge.

Not everyone is evil, but in the finance world, you must always be careful and take care of yourself. There are legal crooks around every corner.

So we have talked long and hard about the types of annuities and the characteristics held by each one. But what we haven’t talked about is the annuitant and beneficiary. Who are these people and what role do they play in our consideration of annuities? Simply put, the annuitant is the person that the annuity… Continue Reading

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We just recently talked about the immediate annuity, which is good for retirees who want to begin collecting payments immediately. But there is a risk associated with this type of annuity that means you could possibly outlive your payments and be stuck without money to pay the bills or support your lifestyle. This is where… Continue Reading

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We briefly touched upon the variable annuity in a previous article, but let’s answer fully the question “What is a variable annuity?” Unlike the fixed annuity, which guarantees a payout based on a promised interest rate, the variable annuity has no guarantee of interest rate. The variable annuity is tax-deferred, meaning that until you close… Continue Reading